Homeowners insurance provides protection for consumers’ largest investment. It’s often required by mortgage lenders and provides liability coverage in the event someone is injured on the property.
There are many things that can affect a homeowner’s insurance premium, such as deadbolt locks, fire alarms and security systems, having a good credit score and living close to a staffed fire station. Even having a dog breed that is considered aggressive can increase homeowners’ insurance rates or impact eligibility with certain companies.
1. Protects Your Investment
Homeowners insurance provides an important layer of protection for your investment. A standard policy reimburses you for the cost of rebuilding your house if it’s destroyed or damaged by a covered risk like fire, tornadoes, or hurricanes. It also covers personal property that’s inside your home, such as furniture, electronics, and sports equipment.
You can choose to insure your dwelling for its replacement cost or actual cash value. The latter takes into account depreciation, while the former will reimburse you for the cost of replacing your belongings or repairing your home with materials of similar kind and quality without deducting for depreciation.
Several factors can influence the cost of your homeowners insurance, including local weather conditions and historical claims data. Deadbolt locks, burglar and fire alarms, and a good credit score can all reduce your premium, while pools, ponds, and trampolines might increase it. Then there’s liability coverage, which covers your legal responsibility for damage or injury caused to other people on your property.
2. Protects Your Family
Homeowners insurance is a safety net that will help protect your family against the financial consequences of unexpected disasters. Homeowners policies typically provide coverage that will pay to repair or rebuild your house and your personal belongings in the event of a fire, a hurricane or a hailstorm. Many also include a certain amount of liability protection for injury or damage to guests and third parties that could occur on your property.
In addition, most home policies will cover the cost of temporary accommodations such as hotel bills and restaurant meals if your house is uninhabitable because of an emergency. You can purchase additional liability coverage on top of what a standard policy provides to ensure that you and your family are protected against more serious injuries or damages.
While some people think of a homeowners policy as something they are forced to have because their mortgage lender requires it, the truth is that going without this type of protection is a major gamble. The potential costs of not having a policy far outweigh the cost of the premiums required to pay for one.
3. Protects Your Personal Property
The main reason most homeowners (and renters) get home insurance is to protect their personal property. If a fire or flood leaves your house uninhabitable, a standard home insurance policy typically provides money to help pay for housing elsewhere. It also typically covers personal belongings up to a certain amount and sometimes even includes liability coverage.
Typical items covered by personal property coverage include televisions, workout equipment, furniture and clothing. More valuable possessions may require scheduling (also known as endorsement or floater) to ensure they’re fully protected.
Homeowners insurance can cover many other things as well, depending on your policy stipulations and the types of coverage you’ve chosen. Check out the websites of major home insurance companies to find a wealth of information about standard and optional coverages.
They also often have tools that can give you an estimate of your annual premium based on basic information about your home and property. This is a great way to compare options and choose the best plan for you.
4. Protects Your Credit
Homeowners insurance is a financial safety net that may keep you from falling into debt or worse, losing your home, even if you lose everything. Many mortgage lenders require it.
Like auto insurance, homeowners policies are offered in a competitive marketplace and insurers have the right to turn down applicants or charge higher rates. However, they cannot consider your race, religion, national origin, sex, age or income in determining the cost of your premium.
Most standard policies cover personal property and additional living expenses (ALE). If you have expensive items in your home, such as jewelry or art, it might be worth taking an inventory to ensure they’re covered.
Most major insurers have websites where you can compare prices and options, and many have toll-free telephone numbers to talk with an agent. They also have agents who can visit your house and explain coverage options. They may even offer discounts for features such as a security system.